Gold remains a resilient hedge amid coronavirus turmoil

Gold has shown a remarkable sense of resilience in light of the recent market downturn as it continues to trade around its seven year high of $1,600 per ounce

Bitcoin is often touted as a safe haven asset and a hedge to the traditional financial system, but it’s actually been gold that has outperformed its digital alternative as it continues to trade above $1,600 per ounce.

The precious metal continues to trade at almost a seven year high with it being 488% up since the turn of the century and 25% up over the past 12 months.

As more and more cryptocurrency investors attempt to seek a safe haven some companies have taken it upon themselves to tokenise gold and make it available to trade on digital asset exchanges.

One of these companies has been Tether, who recently launched the Tether Gold (XAU₮) token, with physical gold being custodied in Switzerland.

Despite only launching a few months ago, XAU₮ has commanded a market cap of $50 million with daily trade volume ranging between $200,000 and $30 million.

The largest day in terms of volume was 13th March during the massive sell-off. This demonstrates that in times of volatility and uncertainty investors flock back to gold.

“People like owning gold through Tether Gold because of the control and accessibility that it offers,” said Paolo Ardoino, CTO at Tether. “As a blockchain-based token that enables you to hold gold without annual fees, XAU₮ will grow from strength to strength. XAU₮ will undoubtedly establish itself as the dominant digital token representing gold ownership.”

Gold may also be on the brink of another major rally if the Coronavirus pandemic continues to worsen, with New York mayor Bill de Blasio admitting on Monday that 80% of New Yorkers will contract the virus, with up to 20% of those requiring intensive care.

The systematic risk that coronavirus poses to the global economic system is undoubtedly bullish for precious metals as stocks, currencies and digital assets continue to suffer.

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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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